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On austerity and the economic outlook in Portugal and Spain
In today's links were two articles which highlighted the juxtaposition between declining sovereign yields and worrisome economic fundamentals in Spain and Portugal.
Employment situation summary puts US cycle peak at June 2012
As you may have heard already, the jobs numbers for the US came out and they confirmed that the US private sector continues to create 150-200,000 new jobs each month. This is consistent with moderate and does not indicate any signs of…
Full text: Moody’s downgrades Croatia’s government bond rating to junk
Moody's Investors Service has today downgraded Croatia's government bond rating to Ba1 from Baa3. Moody's has also changed the outlook to stable from negative.
The theory of social costs: Why markets cannot discipline financial institutions
The continuing attempts to rescue the financial sector (especially in the United States) have laid bare the tremendous social costs created by the way finance dominates the economy. If anything, the various bailouts have actually…
The decoupling of Italy from the periphery
I had intended to write this post yesterday morning. However, after the bank scandal in Italy and the surprise drop in US GDP, I waited a day. The gist of what I intend to say here is that Italy is in the process of decoupling from Spain.…
On the need for Spain to formally apply for an OMT-style bailout
Spanish Prime Minister Mariano Rajoy's economic policy is in tatters. Spain's economic descent is now accelerating, with output shrinking 0.7% in just the last quarter alone - the worst since crisis began in 2009. For the full year, output…
The ECB is losing the currency wars
Earlier today I posted an article in the links on the euro's move up to a 14-month high. As I write this, the euro is trading a 1.3568 to the US dollar, up markedly from 2012's low during the sovereign debt crisis of 1.2063 on 25 July. And…
On the shock contraction in US GDP
US GDP contracted at a 0.1% annualised rate in Q4 of 2012 according to preliminary estimates announced by the US government earlier today. This contraction was well below consensus estimates and comes as a shock to most of the analyst…